Contrary to the classical view of a pre-determined wiring pattern, there is considerable evidence that cortical representation of body parts is continuously modulated in response to activity, behavior and skill acquisition. Both animal and human studies showed that following injury of the peripheral nervous system such as nerve injury or amputation, the somatosensory cortex that responded to the deafferented body parts become responsive to neighboring body parts. Similarly, there is expansion of the motor representation of the stump area following amputation. Reorganization of the sensory and motor systems following peripheral injury occurs in multiple levels including the spinal cord, brainstem, thalamus and cortex. In early-blind subjects, the occipital cortex plays an important role in Braille reading, suggesting that there is cross-modal plasticity. Functional recovery frequently occurs following a CNS injury such as stroke. Motor recovery from stroke may be associated with the adjacent cortical areas taking over the function of the damaged areas or utilization of alternative motor pathways. The ipsilateral motor pathway may mediate motor recovery in patients who undergo hemispherectomy early in life and in children with hemiplegic cerebral palsy, but it remains to be determined if it plays a significant role in the recovery of adult stroke. One of the challenges in stroke recovery is to identify which of the many neuroimaging and neurophysiological changes demonstrated are important in mediating recovery. The mechanism of plasticity probably differs depending on the time frame. Rapid changes in motor representations within minutes are likely due to unmasking of latent synapses involving modulation of GABAergic inhibition. Changes over a longer time likely involve other additional mechanisms such as long-term potentiation, axonal regeneration and sprouting. While cross-modal plasticity appears to be useful in enhancing the perceptions of compensatory sensory modalities, the functional significance of motor reorganization following peripheral injury remains unclear and some forms of sensory reorganization may even be associated with deleterious consequences like phantom pain. An understanding of the mechanism of plasticity will help to develop treatment programs to improve functional outcome.